The news so far this year has understandably been dictated by the Covid-19 global pandemic. So much so that you may have forgotten about Brexit, which has dominated current affairs and split public opinion since the 2016 referendum.
On 31 January 2020, the UK officially left the European Union and Boris Johnson has committed to agreeing the terms of the UK’s new trading relationship with the EU bloc by the end of the year. Talks are currently stalling raising the possibility of a no deal Brexit.
Even without considering the implications of a no deal Brexit, the UK economy could shrink by 14% this year, according to the Bank of England. The dire mood was reflected last week when the UK Government sold its first bond ever with a negative yield, meaning that investors were effectively paying the Government to lend it money. Bonds or gilts, as they are known, are considered a safe haven when investors are worried that economic growth will remain depressed over a sustained period of time.
The UK Government currently projects that it will need to borrow £298 billion up to March 2021, to see it through the coronavirus crisis and the Governor of the Bank of England even indicated last week that interest rates could go negative in 2021, for the first time in history, should the economy need further stimulus at that time.
*More information on Positivity of negative interest
The clock is ticking
The deadline for agreeing a trade deal with the EU is 31 December 2020 and the Government has until 30 June 2020 to ask for an extension to that deadline; Boris Johnson has consistently said he will not do so.
Failure to reach an agreement could expose UK companies to new tariffs which may have an adverse effect on supply chains and make their products/services more expensive, just at the time when the country hopes to be recovering from the impact of Covid-19.
An additional problem for the economy is that Britons may continue to save their money, due to job insecurity or the threat of a second wave of coronavirus infections. Should this happen it will limit the impact of the Government relief efforts and the uncertainty of Brexit will only compound this.
If your company is experiencing financial problems, as a result of Covid-19, please get in touch to discuss your current situation and the options available. Our skilled and experienced team of Insolvency Practitioners will help you find a solution.
Please call us now on 0330 159 8080 for a FREE confidential initial consultation.